MORGAN STANLEY CHARTER WELTON LP - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2002 or

[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to__________________

Commission File Number 0-25607

MORGAN STANLEY CHARTER WELTON L.P.

(Exact name of registrant as specified in its charter)

Delaware 13-4018063
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Demeter Management Corporation
c/o Managed Futures Department
Harborside Financial Center
Plaza Two, 1st Floor, Jersey City, NJ 07311
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (201) 209-8400

825 Third Ave., 8th Floor, New York, NY 10022

(Former name, former address, and former fiscal year, if changed
since last report)

Indicate by check-mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No___________

MORGAN STANLEY CHARTER WELTON L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2002

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MORGAN STANLEY CHARTER WELTON L.P.
STATEMENTS OF FINANCIAL CONDITION

MORGAN STANLEY CHARTER WELTON L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

MORGAN STANLEY CHARTER WELTON L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

MORGAN STANLEY CHARTER WELTON L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Nine Months Ended September 30, 2002 and 2001
(Unaudited)

MORGAN STANLEY CHARTER WELTON L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)

MORGAN STANLEY CHARTER WELTON L.P.
NOTES TO FINANCIAL STATEMENTS

September 30, 2002

(Unaudited)

The unaudited financial statements contained herein include, in
the opinion of management, all adjustments necessary for a fair
presentation of the results of operations and financial condition
of Morgan Stanley Charter Welton L.P. (the "Partnership"). The
financial statements and condensed notes herein should be read in
conjunction with the Partnership's December 31, 2001 Annual Report
on Form 10-K.

1. Organization
Morgan Stanley Charter Welton L.P. is a Delaware limited
partnership organized to engage primarily in the speculative
trading of futures contracts, options on futures contracts and
forward contracts on physical commodities and other commodity
interests, including foreign currencies, financial instruments,
metals, energy and agricultural products. The Partnership is one
of the Morgan Stanley Charter Series of funds, comprised of the
Partnership, Morgan Stanley Charter Graham L.P., Morgan Stanley
Charter Millburn L.P., and Morgan Stanley Charter MSFCM L.P.

MORGAN STANLEY CHARTER WELTON L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The Partnership's general partner is Demeter Management
Corporation ("Demeter"). The non-clearing commodity broker is
Morgan Stanley DW Inc. ("Morgan Stanley DW"). The clearing
commodity brokers are Morgan Stanley & Co., Inc. ("MS & Co.") and
Morgan Stanley & Co. International Limited ("MSIL"). Demeter,
Morgan Stanley DW, MS & Co. and MSIL are wholly-owned subsidiaries
of Morgan Stanley. Welton Investment Corporation (the "Trading
Advisor") is the trading advisor to the Partnership.

2. Related Party Transactions
The Partnership's cash is on deposit with Morgan Stanley DW, MS &
Co. and MSIL in futures, forwards and options trading accounts to
meet margin requirements as needed. Morgan Stanley DW pays
interest on these funds based on a rate equal to that earned by
Morgan Stanley DW on its U.S. Treasury bill investments. The
Partnership pays brokerage fees to Morgan Stanley DW.

3. Financial Instruments
The Partnership trades futures contracts, options on futures
contracts and forward contracts on physical commodities and other

MORGAN STANLEY CHARTER WELTON L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

commodity interests, including foreign currencies, financial
instruments, metals, energy and agricultural products. Futures
and forwards represent contracts for delayed delivery of an
instrument at a specified date and price. Risk arises from
changes in the value of these contracts and the potential
inability of counterparties to perform under the terms of the
contracts. There are numerous factors which may significantly
influence the market value of these contracts, including interest
rate volatility.

The market value of contracts is based on closing prices quoted by
the exchange, bank or clearing firm through which the contracts
are traded.

The Partnership's contracts are accounted for on a trade-date
basis and marked to market on a daily basis. The Partnership
accounts for its derivative investments in accordance with the
provisions of Statement of Financial Accounting Standard No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
("SFAS No. 133"). SFAS No. 133 defines a derivative as a
financial instrument or other contract that has all three of the
following characteristics:

MORGAN STANLEY CHARTER WELTON L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1) One or more underlying notional amounts or payment
provisions;
2) Requires no initial net investment or a smaller initial net
investment than would be required relative to changes in
market factors;
3) Terms require or permit net settlement.

Generally derivatives include futures, forward, swaps or options
contracts, and other financial instruments with similar
characteristics such as caps, floors and collars.

The net unrealized gains on open contracts, reported as a
component of "Equity in futures interests trading accounts" on the
statements of financial condition, and their longest contract
maturities were as follows:
Net Unrealized Gains
on Open Contracts Longest Maturities
Exchange- Off-Exchange- Exchange- Off-Exchange-
Date Traded Traded Total Traded Traded
$ $ $

Sep. 30, 2002 555,595 - 555,595 Jun. 2003 -
Dec. 31, 2001 126,045 - 126,045 Sep. 2002 -

MORGAN STANLEY CHARTER WELTON L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The Partnership has credit risk associated with counterparty non-
performance. The credit risk associated with the instruments in
which the Partnership is involved is limited to the amounts
reflected in the Partnership's statements of financial condition.

The Partnership also has credit risk because Morgan Stanley DW, MS
& Co. and MSIL act as the futures commission merchants or the
counterparties with respect to most of the Partnership's assets.
Exchange-traded futures and futures-styled options contracts are
marked to market on a daily basis, with variations in value
settled on a daily basis. Each of Morgan Stanley DW, MS & Co. and
MSIL, as a futures commission merchant for the Partnership's
exchange-traded futures and futures-styled options contracts, are
required, pursuant to regulations of the Commodity Futures Trading
Commission ("CFTC"), to segregate from their own assets, and for
the sole benefit of their commodity customers, all funds held by
them with respect to exchange-traded futures and futures-styled
options contracts, including an amount equal to the net unrealized
gains on all open futures and futures-styled options contracts,
which funds, in the aggregate, totaled $15,213,370 and $17,452,742
at September 30, 2002 and December 31, 2001, respectively. With
respect to the Partnership's off-exchange-traded forward currency

MORGAN STANLEY CHARTER WELTON L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

contracts, there are no daily settlements of variations in value
nor is there any requirement that an amount equal to the net
unrealized gains on open forward contracts be segregated. With
respect to those off-exchange-traded forward currency contracts,
the Partnership is at risk to the ability of MS & Co., the sole
counterparty on all of such contracts, to perform. The
Partnership has a netting agreement with MS & Co. This agreement,
which seeks to reduce both the Partnership's and MS & Co.'s
exposure on off-exchange-traded forward currency contracts, should
materially decrease the Partnership's credit risk in the event of
MS & Co.'s bankruptcy or insolvency.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Liquidity. The Partnership deposits its assets with Morgan
Stanley DW as non-clearing broker and MS & Co. and MSIL as
clearing brokers in separate futures, forwards and options trading
accounts established for the Trading Advisor, which assets are
used as margin to engage in trading. The assets are held in either
non-interest bearing bank accounts or in securities and
instruments permitted by the CFTC for investment of customer
segregated or secured funds. The Partnership's assets held by the
commodity brokers may be used as margin solely for the
Partnership's trading. Since the Partnership's sole purpose is to
trade in futures, forwards and options, it is expected that the
Partnership will continue to own such liquid assets for margin
purposes.

The Partnership's investment in futures, forwards and options may,
from time to time, be illiquid. Most U.S. futures exchanges limit
fluctuations in prices during a single day by regulations referred
to as "daily price fluctuations limits" or "daily limits". Trades
may not be executed at prices beyond the daily limit. If the
price for a particular futures or options contract has increased
or decreased by an amount equal to the daily limit, positions in
that futures or options contract can neither be taken nor

liquidated unless traders are willing to effect trades at or
within the limit. Futures prices have occasionally moved the daily
limit for several consecutive days with little or no trading.
These market conditions could prevent the Partnership from
promptly liquidating its futures or options contracts and result
in restrictions on redemptions.

There is no limitation on daily price moves in trading forward
contracts on foreign currencies. The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in potentially profitable
markets or prevent the Partnership from promptly liquidating
unfavorable positions in such markets, subjecting it to
substantial losses. Either of these market conditions could
result in restrictions on redemptions.

There are no material trends, demands, commitments, events, or
uncertainties known at the present time that will result in or
that are reasonably likely to result in the Partnership's
liquidity increasing or decreasing in any material way.

The Partnership has never had illiquidity affect a material
portion of its assets.

Capital Resources. The Partnership does not have, nor expect to
have, any capital assets. Redemptions, exchanges and sales of
additional units of limited partnership interest ("Unit(s)") in
the future will affect the amount of funds available for
investment in futures, forwards and options in subsequent periods.
It is not possible to estimate the amount and therefore the impact
of future redemptions of Units.

There are no known material trends, favorable or unfavorable, nor
any expected material changes to the Partnership's capital
resource arrangements at the present time.

The Partnership has no off-balance sheet arrangements, nor
contractual obligations or commercial commitments to make future
payments that would affect the Partnership's liquidity or capital
resources. The contracts traded by the Partnership are accounted
for on a trade-date basis and marked to market on a daily basis.
The value of foreign currency forward contracts is based on the
spot rate as of the close of business, New York City time, on a
given day.

Results of Operations
General. The Partnership's results depend on the Trading Advisor
and the ability of the Trading Advisor's trading programs to take
advantage of price movements or other profit opportunities in the

futures, forwards and options markets. The following presents a
summary of the Partnership's operations for the three and nine
month periods ended September 30, 2002 and 2001, and a general
discussion of its trading activities during each period. It is
important to note, however, that the Trading Advisor trades in
various markets at different times and that prior activity in a
particular market does not mean that such market will be actively
traded by the Trading Advisor or will be profitable in the future.
Consequently, the results of operations of the Partnership are
difficult to discuss other than in the context of the Trading
Advisor's trading activities on behalf of the Partnership and how
the Partnership has performed in the past.

The Partnership's results of operations are set forth in
financial statements prepared in accordance with United States
generally accepted accounting principles, which require the use
of certain accounting policies that affect the amounts reported
in these financial statements, including the following: The
contracts the Partnership trades are accounted for on a trade-
date basis and marked to market on a daily basis. The difference
between their cost and market value is recorded on the Statements
of Operations as "Net change in unrealized profit/loss" for open
(unrealized) contracts, and recorded as "Realized profit/loss"
when open positions are closed out, and the sum of these amounts
constitutes the Partnership's trading revenues. Earned interest

income revenue, as well as management fees, incentive fees and
brokerage fees expenses of the Partnership are recorded on an
accrual basis.

Demeter believes that, based on the nature of the operations of
the Partnership, no assumptions other than those presently used
relating to the application of critical accounting policies are
reasonably plausible that could affect reported amounts.

For the Quarter and Nine Months Ended September 30, 2002
For the quarter ended September 30, 2002, the Partnership
recorded total trading revenues, including interest income, of
$210,127 and, after expenses, posted a decrease in net asset
value per Unit. The most significant losses of approximately
15.2% stemmed from the currency markets during July, as
previously established long positions in the Japanese yen, Swiss
franc, and euro weakened against the dollar due to the emphasis
on a "strong dollar" policy by the Bush Administration, and again
during August and September, due to the persistence of trendless
price activity. Additional losses of approximately 2.5% were
recorded in the metals markets from short positions in nickel
futures as prices reversed higher amid supply and demand
concerns. The most significant gains of approximately 18.4% were
recorded in the global interest rate futures markets from
previously established long positions in U.S., European, and

Japanese interest rate futures, as prices trended higher
throughout the quarter due to investors seeking a safe haven from
falling equity prices and increased pessimism regarding a global
economic recovery. Additional gains of approximately 0.8% were
recorded in the energy futures markets, primarily during September
from long futures positions in natural gas as prices trended
higher due the disruption of output in the Gulf of Mexico because
of Hurricane Isidore. Total expenses for the three months ended
September 30, 2002 were $336,112, resulting in a net loss of
$125,985. The net asset value of a Unit decreased from $7.29 at
June 30, 2002 to $7.22 at September 30, 2002.

For the nine months ended September 30, 2002, the Partnership
recorded total trading revenues, including interest income, of
$1,155,377 and posted an increase in net asset value per Unit.
The most significant gains of approximately 29.2% were recorded
in the global interest rate futures markets from long positions
in Japanese, U.S., and European interest rate futures as prices
trended higher during a majority of the second and third quarters
due to uncertainty regarding a global economic recovery. A
portion of the Partnership's overall gains was offset by losses
of approximately 8.2% in the currency markets from previously

established long positions in Japanese yen relative to the U.S
dollar and Japanese yen/euro cross-rate positions as the value of
the yen reversed lower versus most major currencies amid renewed
concerns regarding Japan's economic woes. Losses of approximately
8.0% were recorded in the global stock index futures markets from
positions in Japanese and U.S. stock index futures as prices
fluctuated without consistent direction from January to June over
geopolitical concerns and uncertainty regarding a global economic
recovery. Additional losses of approximately 3.1% were recorded
in the energy markets, primarily during the second quarter, from
previously established long positions in crude oil futures and its
related products as prices moved lower amid supply and demand
concerns. Total expenses for the nine months ended September 30,
2002 were $1,007,200, resulting in net income of $148,177. The
net asset value of a Unit increased from $7.13 at December 31,
2001 to $7.22 at September 30, 2002.

For the Quarter and Nine Months Ended September 30, 2001
For the quarter ended September 30, 2001, the Partnership
recorded total trading revenues, including interest income, of
$1,580,750 and posted an increase in net asset value per Unit.
The most significant gains of approximately 10.0% were recorded
in the global interest rate futures markets primarily during

August and September from long positions in short-term U.S. and
European interest rate futures as prices trended higher following
interest rate cuts by the U.S. Federal Reserve and as investors
sought the safe haven of shorter maturity fixed income
investments. In the metals markets, gains of approximately 2.5%
were recorded primarily during July and September from short
positions in nickel and aluminum futures as base metal prices
declined on increased supplies and waning demand prompted by weak
U.S. economic data. These gains were partially offset by losses
of approximately 2.6% recorded in the currency markets primarily
during late September from long positions in the Japanese yen as
its value reversed lower relative to the U.S. dollar following
surprise interventions by the Bank of Japan. Smaller losses of
approximately 1.7% were recorded during July and August in the
energy markets from short positions in crude oil futures as
prices reversed higher due to a drop in crude oil inventories, an
OPEC production cut and growing tensions in the Middle East.
Total expenses for the three months ended September 30, 2001 were
$405,709, resulting in net income of $1,175,041. The net asset
value of a Unit increased from $6.56 at June 30, 2001 to $7.00 at
September 30, 2001.

For the nine months ended September 30, 2001, the Partnership
recorded total trading losses, net of interest income, of
$1,969,949 and posted a decrease in net asset value per Unit. The

most significant losses of approximately 10.9% were recorded in
the energy markets primarily during February from short futures
positions in crude oil and its related products as prices
reversed higher amid cold weather forecasts, anticipated OPEC
production cuts and a tightening in supplies. Additional losses
were experienced during July and August from short positions as
oil prices reversed higher due to a drop in crude oil
inventories, an OPEC production cut and growing tensions in the
Middle East. In the currency markets, losses of approximately
9.0% were recorded primarily during January and February from
cross-rate transactions involving the euro relative to the
Japanese yen due to short-term volatility as a result of
conflicting economic signals and a surprise cut in the discount
rate by the Bank of Japan. Additional currency losses were
experienced during late September from long positions in the
Japanese yen as its value reversed lower relative to the U.S.
dollar following surprise interventions by the Bank of Japan.
Smaller losses of approximately 1.7% were recorded in the metals
markets primarily during April and early May from short gold
futures positions as prices climbed higher on weakness in the
U.S. dollar. These losses were partially offset by gains of
approximately 12.8% recorded in the global interest rate futures
markets primarily during August and September from long positions
in short-term U.S. interest rate futures as prices trended higher
following interest rate cuts by the U.S. Federal Reserve and as

investors sought the safe haven of shorter maturity fixed income
investments. In the soft commodities markets, profits of
approximately 1.1% were recorded primarily during February from
short cotton futures positions as cotton prices declined on weak
export sales and low demand. Total expenses for the nine months
ended September 30, 2001 were $1,349,832, resulting in a net loss
of $3,319,781. The net asset value of a Unit decreased from $8.20
at December 31, 2000 to $7.00 at September 30, 2001.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET
RISK

Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards and options. The market-
sensitive instruments held by the Partnership are acquired for
speculative trading purposes only and, as a result, all or
substantially all of the Partnership's assets are at risk of
trading loss. Unlike an operating company, the risk of market-
sensitive instruments is central, not incidental, to the
Partnership's main business activities.

The futures, forwards and options traded by the Partnership
involve varying degrees of related market risk. Market risk is
often dependent upon changes in the level or volatility of
interest rates, exchange rates, and prices of financial
instruments and commodities. Fluctuations in market risk based
upon these factors result in frequent changes in the fair value
of the Partnership's open positions, and, consequently, in its
earnings and cash flow.

The Partnership's total market risk is influenced by a wide
variety of factors, including the diversification among the
Partnership's open positions, the volatility present within the
markets, and the liquidity of the markets. At different times,

each of these factors may act to increase or decrease the market
risk associated with the Partnership.

The Partnership's past performance is not necessarily indicative
of its future results. Any attempt to numerically quantify the
Partnership's market risk is limited by the uncertainty of its
speculative trading. The Partnership's speculative trading may
cause future losses and volatility (i.e., "risk of ruin") that
far exceed the Partnership's experience to date or any reasonable
expectations based upon historical changes in market value.

Quantifying the Partnership's Trading Value at Risk
The following quantitative disclosures regarding the Partnership's
market risk exposures contain "forward-looking statements" within
the meaning of the safe harbor from civil liability provided for
such statements by the Private Securities Litigation Reform Act of
1995 (set forth in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934). All
quantitative disclosures in this section are deemed to be forward-
looking statements for purposes of the safe harbor, except for
statements of historical fact.

The Partnership accounts for open positions on the basis of mark-
to-market accounting principles. Any loss in the market value of
the Partnership's open positions is directly reflected in the

Partnership's earnings, whether realized or unrealized, and its
cash flow. Profits and losses on open positions of exchange-
traded futures, forwards and options are settled daily through
variation margin.

The Partnership's risk exposure in the market sectors traded by
the Trading Advisor is estimated below in terms of Value at Risk
("VaR"). The VaR model used by the Partnership includes many
variables that could change the market value of the Partnership's
trading portfolio. The Partnership estimates VaR using a model
based upon historical simulation with a confidence level of 99%.
Historical simulation involves constructing a distribution of
hypothetical daily changes in the value of a trading portfolio.
The VaR model takes into account linear exposures to price and
interest rate risk. Market risks that are incorporated in the
VaR model include equity and commodity prices, interest rates,
foreign exchange rates, and correlation among these variables.
The hypothetical changes in portfolio value are based on daily
percentage changes observed in key market indices or other market
factors ("market risk factors") to which the portfolio is
sensitive. The historical observation period of the Partner-
ship's VaR is approximately four years. The one-day 99%
confidence level of the Partnership's VaR corresponds to the
negative change in portfolio value that, based on observed market
risk factors, would have been exceeded once in 100 trading days.

In other words, one-day VaR for a portfolio is a number such that
losses in this portfolio are estimated to exceed the VaR only one
day in 100.

VaR is calculated using historical simulation. Demeter uses
approximately four years of daily market data (1,000
observations) and revalues its portfolio (using delta-gamma
approximations) for each of the historical market moves that
occurred over this time period. This generates a probability
distribution of daily 'simulated profit and loss' outcomes. The
VaR is the appropriate percentile of this distribution. For
example, the 99% one-day VaR would represent the 10th worst
outcome from Demeter's simulated profit and loss series.

VaR models, including the Partnership's, are continuously
evolving as trading portfolios become more diverse and modeling
techniques and systems capabilities improve. Please note that
the VaR model is used to numerically quantify market risk for
historic reporting purposes only and is not utilized by either
Demeter or the Trading Advisor in their daily risk management
activities. Please further note that VaR as described above may
not be comparable to similarly titled measures used by other
entities.

The Partnership's Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the
Partnership's open positions as a percentage of total net assets
by primary market risk category at September 30, 2002 and 2001.
At September 30, 2002 and 2001, the Partnership's total
capitalization was approximately $14 million and $18 million,
respectively.

Primary Market September 30, 2002 September 30, 2001
Risk Category Value at Risk Value at Risk

Currency (2.09)% (1.74)%
Interest Rate (2.04) (2.26)
Equity (0.36) (0.61)
Commodity (1.72) (1.71)
Aggregate Value at Risk (3.51)% (3.84)%

The VaR for a market category represents the one-day downside
risk for the aggregate exposures associated with this market
category. The aggregate VaR, listed above for the Partnership,
represents the aggregate VaR of the Partnership's open positions
across all the market categories, and is less than the sum of the
VaRs for all such market categories due to the diversification
benefit across asset classes.

The table above represents the VaR of the Partnership's open
positions at September 30, 2002 and 2001 only and is not
necessarily representative of either the historic or future risk
of an investment in the Partnership. Because the Partnership's
only business is the speculative trading of futures, forwards and
options, the composition of its trading portfolio can change
significantly over any given time period, or even within a single
trading day. Any changes in open positions could positively or
negatively materially impact market risk as measured by VaR.

The table below supplements the quarter-end VaR by presenting the
Partnership's high, low and average VaR, as a percentage of total
net assets for the four quarterly reporting periods from
October 1, 2001 through September 30, 2002.

Primary Market Risk Category High Low Average
Currency (3.10)% (2.09)% (2.52)%

Interest Rate (3.32) (1.57) (2.52)

Equity (1.47) (0.36) (0.83)

Commodity (2.19) (0.89) (1.45)

Aggregate Value at Risk (4.59)% (3.51)% (3.98)%

Limitations on Value at Risk as an Assessment of Market Risk
The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements. Margin requirements generally range between 2% and
15% of contract face value. Additionally, the use of leverage
causes the face value of the market sector instruments held by the
Partnership to typically be many times the total capitalization of
the Partnership. The value of the Partnership's open positions
thus creates a "risk of ruin" not typically found in other
investments. The relative size of the positions held may cause
the Partnership to incur losses greatly in excess of VaR within a
short period of time, given the effects of the leverage employed
and market volatility. The VaR tables above, as well as the past
performance of the Partnership, give no indication of such "risk
of ruin". In addition, VaR risk measures should be viewed in light
of the methodology's limitations, which include the following:
? past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
? changes in portfolio value caused by market movements may differ
from those of the VaR model;
? VaR results reflect past trading positions while future risk
depends on future positions;

? VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
? the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

The VaR tables above present the results of the Partnership's VaR
for each of the Partnership's market risk exposures and on an
aggregate basis at September 30, 2002 and 2001 and for the end of
the four quarterly reporting periods from October 1, 2001 through
September 30, 2002. Since VaR is based on historical data, VaR
should not be viewed as predictive of the Partnership's future
financial performance or its ability to manage or monitor risk.
There can be no assurance that the Partnership's actual losses on
a particular day will not exceed the VaR amounts indicated above
or that such losses will not occur more than once in 100 trading
days.

Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances not needed for margin. These balances and any market
risk they may represent are immaterial.

At September 30, 2002, the Partnership's cash balance at Morgan
Stanley DW was approximately 86% of its total net asset value. A
decline in short-term interest rates will result in a decline in
the Partnership's cash management income. This cash flow risk is
not considered to be material.

Materiality, as used throughout this section, is based on an
assessment of reasonably possible market movements and any
associated potential losses, taking into account the leverage,
optionality and multiplier features of the Partnership's market-
sensitive instruments, in relation to the Partnership's net
assets.

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership's
market risk exposures - except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures -
constitute forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. The Partnership's primary market risk
exposures as well as the strategies used and to be used by
Demeter and the Trading Advisor for managing such exposures are
subject to numerous uncertainties, contingencies and risks, any
one of which could cause the actual results of the Partnership's

risk controls to differ materially from the objectives of such
strategies. Government interventions, defaults and
expropriations, illiquid markets, the emergence of dominant
fundamental factors, political upheavals, changes in historical
price relationships, an influx of new market participants,
increased regulation and many other factors could result in
material losses as well as in material changes to the risk
exposures and the risk management strategies of the Partnership.
Investors must be prepared to lose all or substantially all of
their investment in the Partnership.

The following were the primary trading risk exposures of the
Partnership at September 30, 2002, by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.

Currency. The largest market exposure of the Partnership at
September 30, 2002 was to the currency sector. The Partnership's
currency exposure at September 30, 2002 was to exchange rate
fluctuations, primarily fluctuations which disrupt the historical
pricing relationships between different currencies and currency
pairs. Interest rate changes as well as political and general
economic conditions influence these fluctuations. The
Partnership trades a large number of currencies, including cross-
rates - i.e., positions between two currencies other than

the U.S. dollar. At September 30, 2002, the Partnership's
exposure was mostly to outright U.S. dollar positions. Outright
positions consist of the U.S. dollar vs. other currencies. These
other currencies include major and minor currencies. Demeter
does not anticipate that the risk profile of the Partnership's
currency sector will change significantly in the future. The
currency trading VaR figure includes foreign margin amounts
converted into U.S. dollars with an incremental adjustment to
reflect the exchange rate risk inherent to the U.S.-based
Partnership in expressing VaR in a functional currency other than
U.S. dollars.

Interest Rate. The second largest market exposure of the
Partnership at September 30, 2002 was to the global interest rate
complex. The exposure was primarily spread across the U.S.,
European and Japanese interest rate sectors. Interest rate
movements directly affect the price of the sovereign bond futures
positions held by the Partnership and indirectly affect the value
of its stock index and currency positions. Interest rate
movements in one country as well as relative interest rate
movements between countries materially impact the Partnership's
profitability. The Partnership's primary interest rate exposure
is generally to interest rate fluctuations in the U.S. and the
other G-7 countries. The G-7 countries consist of France, the

U.S., Britain, Germany, Japan, Italy, and Canada. Demeter
anticipates that the G-7 countries' interest rates will remain
the primary interest rate exposure of the Partnership for the
foreseeable future. The speculative futures positions held by
the Partnership may range from short to long-term instruments.
Consequently, changes in short, medium or long-term interest
rates may have an effect on the Partnership.

Equity. The primary equity exposure at September 30, 2002 was to
equity price risk in the G-7 countries. The stock index futures
traded by the Partnership are by law limited to futures on
broadly-based indices. At September 30, 2002, the Partnership's
primary exposures were to the S&P 500 (U.S.) and Nikkei (Japan)
stock indices. The Partnership is primarily exposed to the risk
of adverse price trends or static markets in the U.S. and
Japanese indices. Static markets would not cause major market
changes but would make it difficult for the Partnership to avoid
being "whipsawed" into numerous small losses.

Commodity
Energy. At September 30, 2002, the Partnership's energy
exposure was shared primarily by futures contracts in crude
oil and its related products, and natural gas. Price
movements in these markets result from political
developments in the Middle East, weather patterns, and other

economic fundamentals. Significant profits and losses,
which have been experienced in the past, are expected to
continue to be experienced in these markets. Natural gas has
exhibited volatility in prices resulting from weather
patterns and supply and demand factors and may continue in
this choppy pattern.

Metals. The Partnership's metals exposure at September 30,
2002 was to fluctuations in the price of precious metals,
such as gold, and base metals, such as nickel. Economic
forces, supply and demand inequalities, geopolitical factors
and market expectations influence price movements in these
markets. The Trading Advisor, from time to time, takes
positions when market opportunities develop. Demeter
anticipates that the Partnership will continue to be exposed
to the precious and base metals markets.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at September 30, 2002:

Foreign Currency Balances. The Partnership's primary
foreign currency balance at September 30, 2002 was in
Japanese yen. The Partnership controls the non-trading risk

of these balances by regularly converting them back into
U.S. dollars upon liquidation of their respective positions.

Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Advisor, separately, attempt to
manage the risk of the Partnership's open positions in essentially
the same manner in all market categories traded. Demeter attempts
to manage market exposure by diversifying the Partnership's assets
among different market sectors and trading approaches, and
monitoring the performance of the Trading Advisor daily. In
addition, the Trading Advisor establishes diversification
guidelines, often set in terms of the maximum margin to be
committed to positions in any one market sector or market-
sensitive instrument.

Demeter monitors and controls the risk of the Partnership's non-
trading instrument, cash. Cash is the only Partnership investment
directed by Demeter, rather than the Trading Advisor.

Item 4. CONTROLS AND PROCEDURES
(a) As of a date within 90 days of the filing date of this
quarterly report, the President and Chief Financial
Officer of the general partner, Demeter, have evaluated
the Partnership's disclosure controls and procedures,
and have judged such controls and procedures to be
effective.

(b) There have been no significant changes in the
Partnership's internal controls or in other factors that
could significantly affect these controls subsequent to
the date of their evaluation.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS
None.

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Partnership initially registered 3,000,000 Units pursuant to a
Registration Statement on Form S-1, which became effective on
November 6, 1998 (SEC File Number 333-60097).

The Partnership registered an additional 6,000,000 Units pursuant
to a new Registration Statement on Form S-1, which became
effective on March 27, 2000 (SEC File Number 333-91567).

The managing underwriter for the Partnership is Morgan Stanley
DW.

Units are sold continuously at monthly closings at a price equal
to 100% of the net asset value per Unit as of the close of
business on the last day of each month.

Through September 30, 2002, 4,124,362.085 Units were sold,
leaving 4,875,637.915 Units unsold. The aggregate price of the
Units sold through September 30, 2002 was $35,527,319.

Since no expenses are chargeable against proceeds, 100% of the
proceeds of the offering have been applied to the working capital
of the Partnership for use in accordance with the "Use of
Proceeds" section of the Prospectus included as part of the above
referenced Registration Statement.

Item 5. OTHER INFORMATION
Changes in Management
The following changes have been made to the Board of Directors
and Officers of Demeter Management Corporation, the general
partner:

Mr. Robert E. Murray resigned the position of President of
Demeter. Mr. Murray, however, retains his position as Chairman
and as a Director of Demeter.

Mr. Jeffrey A. Rothman, age 41, was named President and a
Director of Demeter. Mr. Rothman is the Executive Director of
Morgan Stanley Managed Futures, responsible for overseeing all
aspects of the firm's managed futures department. He is also
President and a Director of Morgan Stanley Futures & Currency
Management Inc., Morgan Stanley's internal commodity trading
advisor. Mr. Rothman has been with the Managed Futures
Department for sixteen years and most recently held the position

of National Sales Manager, assisting Branch Managers and
Financial Advisors with their managed futures education,
marketing, and asset retention efforts. Throughout his career,
Mr. Rothman has helped with the development, marketing, and
administration of approximately 33 commodity pool investments.
Mr. Rothman is an active member of the Managed Funds Association
and serves on its Board of Directors.

Mr. Frank Zafran, age 47, will become a Director of Demeter and
of Morgan Stanley Futures & Currency Management Inc. once he has
registered with the National Futures Association as an associated
person of both firms, which registration is currently pending.
Mr. Zafran is an Executive Director of Morgan Stanley and, in
September 2002, was named Chief Administrative Officer of Morgan
Stanley's Global Products and Services Division. Mr. Zafran
joined the firm in 1979 and has held various positions in
Corporate Accounting and the Insurance Department, including
Senior Operations Officer - Insurance Division, until his
appointment in 2000 as Director of 401(k) Plan Services,
responsible for all aspects of 401(k) Plan Services including
marketing, sales and operations. Mr. Zafran received a B.S.
degree in Accounting from Brooklyn College, New York.

Mr. Raymond E. Koch resigned the position of Chief Financial
Officer of Demeter.

Mr. Jeffrey D. Hahn, age 45, was named Chief Financial Officer of
Demeter. Mr. Hahn began his career at Morgan Stanley in 1992 and
is currently an Executive Director responsible for the management
and supervision of the accounting, reporting, tax and finance
functions for the firm's private equity, managed futures, and
certain legacy real estate investing activities. He is also
Chief Financial Officer of Morgan Stanley Futures & Currency
Management Inc. From August 1984 through May 1992, Mr. Hahn held
various positions as an auditor at Coopers & Lybrand,
specializing in manufacturing businesses and venture capital
organizations. Mr. Hahn received his B.A. in Economics from St.
Lawrence University in 1979, an M.B.A. from Pace University in
1984, and is a Certified Public Accountant.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits

3.01 Form of Amended and Restated Limited Partnership
Agreement of the Partnership is incorporated by reference
to Exhibit A of the Partnership's Prospectus, dated July
29, 2002, filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933, as amended, on August 12, 2002.
3.02 Certificate of Limited Partnership, dated July 15, 1998,
is incorporated by reference to Exhibit 3.02 of the
Partnership's Registration Statement on Form S-1 (File
No. 333-60097) filed with the Securities and Exchange
Commission on July 29, 1998.

3.03 Certificate of Amendment of Certificate of Limited
Partnership, dated November 1, 2001 (changing its name
from Morgan Stanley Dean Witter Welton L.P.), is
incorporated by reference to Exhibit 3.01 of the
Partnership's Form 8-K (File No. 0-25607) filed with the
Securities and Exchange Commission on November 6, 2001.
10.01 Management Agreement, dated as of November 6, 1998, among
the Partnership, Demeter and Welton Investment
Corporation, is incorporated by reference to Exhibit
10.01 of the Partnership's Quarterly Report on Form 10-Q
(File No. 0-25607) filed with the Securities and Exchange
Commission on May 17, 1999.
10.02 Form of Subscription and Exchange Agreement and Power of
Attorney to be executed by each purchaser of Units, is
incorporated by referenced to Exhibit B of the
Partnership's Prospectus, dated July 29, 2002, filed with
the Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933, as amended,
on August 12, 2002.
10.03 Amended and Restated Escrow Agreement, dated as of
October 11, 2000, among the Partnership, Morgan Stanley
Charter Graham L.P., Morgan Stanley Charter Millburn
L.P., Morgan Stanley Charter MSFCM L.P., Morgan Stanley
DW and The Chase Manhattan Bank is incorporated by
reference to Exhibit 10.04 of the Partnership's Post-
Effective Amendment No. 3 to the Registration Statement
on Form S-1 (File No. 333-91567) filed with the
Securities and Exchange Commission on March 30, 2001.
10.04 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW, dated as of November
13, 2000, is incorporated by reference to Exhibit 10.01
of the Partnership's Form 8-K (File No. 0-25607) filed
with the Securities and Exchange Commission on November
6, 2001.
10.05 Commodity Futures Customer Agreement between MS & Co. and
the Partnership, and acknowledged and agreed to by Morgan
Stanley DW, dated as of November 6, 2000, is incorporated
by reference to Exhibit 10.02 of the Partnership's Form
8-K (File No. 0-25607) filed with the Securities and
Exchange Commission on November 6, 2001.

10.06 Customer Agreement between the Partnership and MSIL,
dated as of November 6, 2000, is incorporated by
reference to Exhibit 10.04 of the Partnership's Form 8-K
(File No. 0-25607) filed with the Securities and Exchange
Commission on November 6, 2001.
10.07 Foreign Exchange and Options Master Agreement between MS
& Co. and the Partnership, dated as of August 30, 1999,
is incorporated by reference to Exhibit 10.05 of the
Partnership's Form 8-K (File No. 0-25607) filed with the
Securities and Exchange Commission on November 6, 2001.
10.08 Form of Subscription Agreement Update Form is
incorporated by reference to Exhibit C of the
Partnership's Prospectus, dated July 29, 2002, filed with
the Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933, as amended,
on August 12, 2002.
10.09 Securities Account Control Agreement among the
Partnership, MS & Co., and Morgan Stanley DW, dated as of
May 1, 2000, is incorporated by reference to Exhibit
10.03 of the Partnership's Form 8-K (File No. 0-25603)
filed with the Securities and Exchange Commission on
November 6, 2001.
99.01 Certification of Periodic Report by Jeffrey A. Rothman,
President of Demeter Management Corporation, the general
partner of the Partnership.
99.02 Certification of Periodic Report by Jeffrey D. Hahn,
Chief Financial Officer of Demeter Management
Corporation, the general partner of the Partnership.

(B) Reports on Form 8-K. - None.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Morgan Stanley Charter Welton L.P.
(Registrant)

By: Demeter Management Corporation
(General Partner)

November 14, 2002 By:/s/Jeffrey D. Hahn
Jeffrey D. Hahn
Chief Financial Officer

The General Partner which signed the above is the only party
authorized to act for the Registrant. The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.

CERTIFICATIONS

I, Jeffrey A. Rothman, President of Demeter Management
Corporation, the general partner of the Partnership, certify that:

1. I have reviewed this quarterly report on Form 10-Q of the
Partnership;

2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
Partnership as of, and for, the periods presented in this
quarterly report;

4. Demeter's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the Partnership and we have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the Partnership,
including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the Partnership's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the
"Evaluation Date"); and

c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5. Demeter's other certifying officers and I have disclosed,
based on our most recent evaluation, to the Partnership's
auditors and the audit committee of Demeter's board of
directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
Partnership's ability to record, process, summarize and
report financial data and have identified for the
Partnership's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the Partnership's internal controls; and

6. Demeter's other certifying officers and I have indicated in
this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.

Date: November 14, 2002 /s/Jeffrey A. Rothman
Jeffrey A. Rothman
President, Demeter Management
Corporation, general partner
of the Partnership

CERTIFICATIONS
I, Jeffrey D. Hahn, Chief Financial Officer of Demeter Management
Corporation, the general partner of the Partnership, certify
that:

1. I have reviewed this quarterly report on Form 10-Q of the
Partnership;

2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made,
in light of the circumstances under which such statements
were made, not misleading with respect to the period covered
by this quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
Partnership as of, and for, the periods presented in this
quarterly report;

4. Demeter's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the Partnership and we have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the
Partnership, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;

b) evaluated the effectiveness of the Partnership's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;

5. Demeter's other certifying officers and I have disclosed,
based on our most recent evaluation, to the Partnership's
auditors and the audit committee of Demeter's board of
directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
Partnership's ability to record, process, summarize and
report financial data and have identified for the
Partnership's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the Partnership's internal controls; and

6. Demeter's other certifying officers and I have indicated in
this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.

Date: November 14, 2002 /s/Jeffrey D. Hahn
Jeffrey D. Hahn
Chief Financial Officer,
Demeter Management Corporation,
general partner of the
Partnership

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Morgan Stanley Charter
Welton L.P. (the "Partnership") on Form 10-Q for the period ended
September 30, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Jeffrey A.
Rothman, President, Demeter Management Corporation, general
partner of the Partnership, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:
(1) The Report fully complies with the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results
of operations of the Partnership.

By: /s/Jeffrey A. Rothman

Name: Jeffrey A. Rothman
Title: President

Date: November 14, 2002

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Morgan Stanley Charter
Welton L.P. (the "Partnership") on Form 10-Q for the period ended
September 30, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Jeffrey D. Hahn,
Chief Financial Officer, Demeter Management Corporation, general
partner of the Partnership, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:
(1) The Report fully complies with the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results
of operations of the Partnership.

By: /s/Jeffrey D. Hahn

Name: Jeffrey D. Hahn
Title: Chief Financial Officer

Date: November 14, 2002